LONDON—Cushman & Wakefield has a word of advice for investors in European real estate: focus. That is, pay close attention to the growing number of macro risk factors affecting the region, with a view of taking advantage of the growth potential.

Specifically, C&W's report, titled “Capital Views: Risk versus Opportunity,” advises investors to be mindful of the political instability overlaying much of Europe. There have been the recent events in Paris, heightened conflict in the Ukraine, strains among EU members over monetary policy and rising pressure from extreme political parties in a number of countries across the continent.

Added to which, the UK, Spain, Portugal, Poland, Denmark, Finland and Turkey all will see elections taking place this year. “Recent events are reminding the market that there is no room for complacency,” says David Hutchings, C&W's head of EMEA investment strategy. “Europe generally, and the euro area specifically, face a critical time in the next few weeks in which events and decisions will shape the way the region evolves—and not just for the remainder of this year but potentially for some time beyond.”

While many of these events and decisions pertain to specific nations, one new initiative cuts across borders. Months after the US wound down its third round of quantitative easing, the European Community Bank is implementing a QE strategy that's larger than many had expected.

The ECB will buy up 60 billion euros worth of government and covered bonds per month until the target rate of 2% inflation is reached. “This open-ended undertaking to hit the target shows that the bank is committed to inflation control and that the 'whatever it takes' promise of 2012 is still alive and kicking,” according to C&W's report.

If the QE program succeeds, “the impact on property markets in general could be substantial, as even more demand will be diverted into the market,” the report states. “As a result, yields are set to fall more than expected and volumes will be pushed further back towards record levels.”

Absent a QE program, C&W says the market may have seen an increase of 5% to 10% in investment volume this year, alongside a prime yield decline of 20 to 30 basis points. “With a successful QE package delivering 'lower for longer' borrowing costs, more growth and some reform, that forecast is increased to a 40- to 70-bp yield fall and a 20%-plus jump in property trading.”

In looking past the region's current uncertainty, Hutchings says, “one thing we can surmise is that we may now have reached a high watermark for austerity in Europe and a more concerted drive for growth could soon get underway. This would benefit most property markets but the biggest winners would be those like Ireland, Spain and Portugal which are delivering successful reforms to boost their economic potential.”

He adds that although the economic boost from these trends “will be modest and far from universal, it will be real and as far as real estate markets are concerned, it should help to deliver the start of a rebalancing between occupier and investor markets as employment and spending increase. All sectors stand to benefit but the turnaround from last year may be most marked for retail as increasing purchasing power boosts the consumer.”